The IRS recently proposed regulations under IRC § 2704 that will potentially eliminate valuation discounts, affecting the gift and estate tax value of family-owned businesses. Individuals with interest in a family-owned business and further subjection to estate tax can be greatly affected by a significant increase in estate tax to those business interests. With such uncertainty to the passage of these regulations, there is still time to be combative and plan ahead. You can seek to transfer existing business interests before the regulations are finalized. Further, you can look to increase the liquidity of your estate in order to pay for the increase in estate taxes. However, the regulations stand to create some benefits, such as income tax benefits and a higher step-up in basis.
See Day Pitney Estate Planning Update, Estate Planning Update September 2016 – Family Business Planning in Light of Proposed Regulations Under Section 2704, Day Pitney LLP, September 30, 2016.
Special thanks to Jim Jay Stapleton (Account Director/Public Relations, Quinn & Hary Marketing) for bringing this article to my attention.
